So the WSJ is breathlessly reporting that there’s massive momentum in favour of a bank tax, and the conclusion is that Wall Street should be freaked out.Realistically, however, the real battleground is going to take place in London.
There is where the government has a massive debt to fill (so do we, but we’re not really trying to do anything about it) and where the banks did come very close to taking down the entire government.
What makes the story interesting is that France is clearly trying to make inroads into UK finance.
Last week Gillian Tett reported on the launch of a new French bond trading platform, which in her judgment should have The City somewhat nervous.
Combine that with the “tax the banks” platform of surging conservatives, and you could be looking at the beginning of some real forces that push some share of finance out of London.
Of course, the French need tax revenue too. It’s just that they need some action on their side of the channel before they can raise it.
Perhaps, then, the calculus of French Finance Minister Christine Lagarde is basically: Lure ’em over… wait a while, tax ’em.
One other thing to note: The French have three key financial ministers in place: Trichet (EU) Strauss-Kahn (IMF) and Michel Barnier (EU Financial Services commissioner). If ever there were a moment for them to pounce in a real way, this would be it.